Human Resources Planning And Performance Measurement

2002 Conference Series

Exercising Effective Oversight Of Payment Systems, Technological Innovation And The Impact Of E-Money

4-day intensive residential programme, 1 - 5 September 2002
Venue: Christ's College, Cambridge

Dear Delegate,

A reliable payment system is crucial to the orderly operation of a nation’s banking and financial system, its real economy and to the reputation of the central bank. At a time of pervasive technological development and growing recognition of the importance of well-designed payment systems, this training course/seminar focuses on the responsibilities and the objectives of central banks in exercising effective oversight of payment systems, in developed countries as well as emerging markets.

The four-day programme addresses the profound practical issues raised by the revolution in payment systems, the conversion to electronic payments, and the emergence of a new form of money – e-money. The course/seminar will challenge delegates to question whether they have fully considered the practical, legal and regulatory implications for the management of their payment systems.

The core principles issued by the Committee on Payment and Settlement Systems (CPSS) of the G10 central banks are designed to be widely applicable to central banks and financial systems world-wide, as a means by which individual countries can assess key aspects of their own payment systems. But how is this assessment and application to be carried out in practice? Participants will have frequent opportunities to learn from expert speakers and from each other, through discussions of their own national experiences.

This year will see the realisation of continuous linked settlement in the foreign exchange markets. However, the limited number of currencies and participants will require many banks to operate parallel settlement arrangements for their forex trades – what will be the consequences for those within and outside the system?

By attending the course, delegates should benefit from a deeper understanding of the issues and an enhanced ability to manage the practical challenges they face.

Once again we are proud to present a distinguished panel of presenters and the programme also benefits from the advice of Neil Whoriskey, of the Central Bank of Ireland, and Professor Charles Goodhart.

We look forward to welcoming you to Cambridge on September 1st, 2002.

Yours sincerely,

William Clarke, CBE, PhD
Chairman, Central Banking Publications

Sunday 1st SEPTEMBER

Reception Drinks and Welcoming Dinner

Monday 2nd SEPTEMBER

DEFINING PRIORITIES AND SETTING LIMITS TO THE ROLE OF THE CENTRAL BANK
Chairman: Peter Allsopp

The Core Principles in the IMF’s Financial Sector Assessment Programme
Peter Allsopp,
former Head of Payment Systems, Bank of England

Peter Allsopp will discuss the role of the IMF in the assessment of countries’ compliance with the core principles (CPSIPS), within the context of the IMF’s and the World Bank’s Financial Sector Assessment Programme (FSAP). What has been the experience of the Fund working with the core principles? How have the assessed countries found the experience?

Introducing the Core Principles
John Trundle
Head of Market Infrastructure, Bank of England

John Trundle explains the nature and importance of the Core Principles for Systemically Important Payment Systems (CPSIPS) based on his work as chairman of the G10 task force which drafted the principles.

The role of central banks in developing their countries’ payment systems
speaker to be confirmed

Central banks are presented with a wide array of complex challenges related to payment systems and their development. They must trade off diverse public policy objectives, balancing safety and efficiency. The new core principles must also be taken into account. In the development of payment systems, and for reform to work, the central bank must take a lead role.

Practical issues in the oversight and governance of private sector payment systems
Michael Lewis, Deputy Director, APACS;
and Piet Mallekoote, Manager, Payment Systems Depertment, The Netherlands Bank

What are the major policy objectives for the central bank? Where should the regulatory boundaries with the private sector be drawn? Michael Lewis will present the view from the private sector and a speaker will provide a central bank’s perspective.

Roundtable
on the core principles John Trundle, Peter Allsopp, Michael Lewis

Tuesday 3rd SEPTEMBER

EMONEY, and MANAGEMENT of TECHNOLOGICAL CHANGE
Chairman:David Birch,Director, Consult Hyperion

E-money and emerging payments technologies
David Birch
Director, Consult Hyperion

It has been said that: “Digital money is the payment system of the future… and will remain so!” But is this cynical view still true? This presentation will address the current and future impact of e-money on central banks. Do central banks – as payment systems overseers – have anything to fear from new payment technologies, or is e-money unlikely to ever move far beyond small-scale retail experiments?

E-money and the electronification of payment systems
Harry Leinonen
Financial Markets Department, Bank of Finland

Distributed network technology, real-time processing and customers’ willingness to use electronic banking interfaces will reshape banking systems world-wide in the next few years. Internet and e-commerce will have a profound effect on payment systems. Mr Leinonen reviews the Scandinavian experience.

E-money/internet payments – legal implications
speaker to be confirmed

The use of e-money and e-commerce push back the boundaries of current legal infrastructure. Establishing and maintaining a legal structure to facilitate transactions in these media is crucial to ensuring efficiency and security in the payments system – can legal developments keep pace? This session will consider the legal regimes conducive to ensuring safe and efficient payments over the internet and the regulation of e-money in general.

Managing large scale IT projects
Paul Whitmore
Chairman, Consultancy Associates Ltd

Payments system reform requires careful project management. How can countries at different stages of development actually implement such programmes? What are the critical steps in the process? When should central banks and others seek outside help? The experienced presenter will address the potential pit-falls and lessons to be learned in the managing and implementation of large scale IT projects.

The role of SWIFT
Harry Newman, Swift, SC

SWIFT’s payment message system is at the core of the vast majority of modern payments infrastructure. Moreover, SWIFT has an unrivalled experience in implementing technological change in financial markets around the world. What key lessons has it learnt in developed and developing economies? This presentation will address the critical issues in payment system reform and the central role of SWIFT in that reform.

Wednesday 4th SEPTEMBER

PAYMENT SYSTEMS, THE FINANCIAL MARKETS AND THE WIDER ECONOMY
Chairman:Peter Allsopp

The influence of the private sector in payment systems design and operation
Group discussion

In this session delegates will briefly describe the role and responsibilities of the private sector in their own countries and discuss its influence on payment systems. How do the country-specific idiosyncrasies of the private sector and the financial markets influence the ease with which reform can proceed? How do they influence the process that should be followed? What particular challenges do individual countries face in the operation of their payment systems? What particular issues have been thrown up by their reform initiatives? We will, for example, compare and contrast the situations of several countries at different stages of economic development.

Payment systems: liquidity, collateral and the settlement of securities transactions
John Nugée
State Street Global Advisors

Increasing volumes of securities transactions and the move towards real time gross settlement both tend to increase demand for collateral in payment systems. The desire to manage liquidity more efficiently is making payment systems and securities trading and settlement systems increasingly inter-dependent. Not only must banks pay far more attention to their liquidity management, but also central banks must monitor liquidity in the system and find ways to avoid liquidity deadlocks. What does this mean for the operators and the overseers of those payment systems, and for their members?

Foreign exchange clearing: towards continuous linked settlement
Ms Nan Norman, Executive vice-president, CLS Bank

The introduction of continuous linked settlement (CLS) for the major forex markets is imminent. The hope is that this will go a long way towards eliminating Herstatt risk. How will this affect the banking system? In particular what are the implications for currencies and central banks now outside the system, but who may, in the future, join?

The future of the cheque as a payment instrument
Jacqueline Lacoste
Banque de France

An apparent anachronism in the world of modern finance, the old-fashioned cheque is still preferred by many. With no pan-European cheque clearing system established, what role, if any, will the cheque continue to play in the future of European payments?

Thursday 5th SEPTEMBER

PAYMENT SYSTEMS INTO THE FUTURE
Chairman:Peter Allsopp

Operational risk in payment systems
Roger Jones
Lloyds TSB

Central banks face broad challenges in responding to the information technology revolution. With today’s pervasive reliance on technology, computer or mechanical failure is an increasing worry. What safeguards can be installed and how can IT and other operational risks be monitored and controlled? What provisions can be made and contingency facilities established?

Operational risk – the banking supervisory perspective
speaker to be confirmed

Operational risk can be interpreted as the risk of losses resulting from inadequate or failed processes, people or systems or external events. What is the role of regulatory agencies in ensuring the proper management of operational risk? How easily can the central bank’s payment system oversight role fit in with banking supervisors concerns about operational risk?

The future of payment systems
Charles Goldfinger
Global Electronic Finance Management / Chairman, Financial Internet Working Group

This session considers the evolution of money and payment systems into the future. Will there be a proliferation of issuers and currencies? Alternatively will we see the emergence of a single global currency? How will digital value contracts evolve and what will be the regulatory implications?

Group discussion rounding up lessons of the previous week